The PML-N government has taken a bold initiative to settle circular debt and is taking steps to ensure that it does not recur in future, Finance Minister Senator Mohammad Ishaq Dar told participants of Pakistan-US Business Opportunity Conference in Dubai on Tuesday. "This step should help raise the confidence of investors and investment in this critical sector should resume," he said.
A message received here quoted Ishaq Dar as saying that this second conference is taking place at a time when a democratic government has assumed office. Dar said: "Our economy is facing a number of challenges and we are aware that until we overcome these challenges, the road to progress will not be smooth," he remarked. "I understand that this is the second conferences and that more such conferences may be arranged depending on the demand from the two sides," he maintained. Dar welcomed the initiative and said: "I must also say the presence of ministerial delegation from Pakistan, at a time when we were all committed with the parliamentary business of budget approval, is a clear signal of our commitment and support for the conference," he said.
Finance Minister welcomed business leaders attending the conference and said: "I see top business groups from Pakistan and I am sure equally formidable groups would be participating from the US side... "I will not discuss all these challenges, but I would single out two challenges that are most relevant for the occasion; and something the participants would like to know how the new government would tackle them".
First, he said, "it is the significant imbalances in our macro economic framework that pose major threats to economic stability". He added that it is well known that the twin deficits of fiscal and balance of payments "are not in the best of shapes". "Not only that sufficient reserves are not available commensurate with our trade volume, domestic credit is largely pre-empted by government borrowings, leaving little room for the private sector to invest and growth," he remarked.
"It needs no elaboration that without a serious effort to correct these imbalances, realistic hope of economic turnaround will not be possible. Much of initial efforts will be devoted in putting a set of policies that will correct these imbalances," he said. Second, he said Pakistan's "identity as an economy with a stable policy framework is missing".
"Undoubtedly, over the last three decades the country has moved in the direction of creating an increasingly larger space for the private sector and establishing a regulatory framework for private investment in such important sectors, such as banking and finance, telecommunications, power, oil and gas and electronic media with a view to protecting and safeguarding interests of all stakeholders," he said.
Identifying several cross-cutting subjects such as power transmission and distribution, gas transmission and distribution, airlines, railways, shipping, ports and highways, he said that these remained firmly in government's hands "with the result that even those positive externalities that we should have experienced from previously created space have not given us the kind of benefits everyone expected".
"That is just one aspect; the regulatory regimes remain obstructive, cost of doing business is high and taxation policies and administration are not business friendly," he said. Dar noted problems and said that a predictable business regime "is the fundamental requirement for spurring investment and consequent economic growth in any country".
He said that it was for this reason that the PML-N government had come into office with a clear economic vision that "will guide our economic policies throughout our tenure". He said that in view of its significance, he had unfolded this vision in the budget speech. This vision, he said, assigned a larger share of economic development to private sector, restricts government to regulatory sector, limits government expenditures within the larger bounds of revenues collected, making all citizens share the burden of revenue mobilisation; ending the culture of exemptions and concessions in taxes, providing public sector services on the principle of cost recovery; giving subsidies only to targeted populations and finally creating a very strong social protection system for the poorest segments of the population.
"As soon as we translate this vision into reality our identity will be firmly established in the eyes of the world. We will then have a predictable investment regime. And we are confident that this definitive character of Pakistan will soon be a reality," he said. The Minister also acknowledged Pakistan's strong economic partnership with the United States. "In the months and years ahead, I am confident this partnership will only grow stronger. We will welcome US investors and are prepared to facilitate their investments in Pakistan," he observed.
According to him, the conference was mainly focusing on energy, agriculture and textiles. "All of them offer huge economic opportunities both for investment and trade. On the energy side, let me note that despite having started well in introducing private power in Pakistan we could not carry the process to its logical end and in the process began to fall short on making payments to IPPs."
He said: "We are also working to bring new power (projects) based on gas and coal and both of these we will initially import. All of you know these projects will result in significant business opportunities in Pakistan and I would urge all of you take a good look at them and be the first to line up for them." In the agriculture sector, he said that Pakistan had limitless opportunities in value addition to agricultural products.
"We welcome this initiative and it is for this reason that the government of Pakistan has extended its fullest support for its success. I must also say the presence of ministerial delegation from Pakistan, at a time when we were all committed with the parliamentary business of budget approval, is a clear signal of our commitment and support for the conference," he said.
Later, Minister for Water and Power Khwaja Muhammad Asif said that the government was committed to promote trade, commerce and investment for achieving national prosperity. The minister said the United States had emerged as Pakistan's largest trading partner besides a source of significant investment in Pakistan and its co-operation in the fields of energy, agriculture and education would grow stronger and deeper in the days to come.